Unit information: Advanced Corporate Finance in 2019/20

Unit name	Advanced Corporate Finance
Unit code	ECONM2032
Credit points	15
Level of study	M/7
Teaching block(s)	Teaching Block 2 (weeks 13 - 24)
Unit director	Dr. Ordonez-Calafi
Open unit status	Not open
Pre-requisites	None
Co-requisites	None
School/department	School of Accounting and Finance - Business School
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

This unit aims to build on students' prior knowledge of basic issues in corporate finance to treat some more advanced theoretical and empirical research in certain corporate finance topics. These topics will include models of firms' capital structure decisions based on agency problems and information asymmetry arguments, theory and empirical work surrounding Initial Public Offerings (IPOs), corporate governance mechanisms, and models of merger and takeover activity. The unit is designed to expose the students to the current academic research in the field. Emphasis is put on critical reading, interpretation of empirical tests in light of theories and understanding of econometric techniques in applied corporate finance research. Given its nature, the unit is suitable for students considering a career in practical corporate finance or further academic work in this area.

Intended Learning Outcomes

Having successfully completed this unit students should be able to:

1. Describe the limitations of the simple Modigliani-Miller approach to corporate finance;
2. Describe and set out models that demonstrate the importance of agency issues and asymmetric information in the determination of optimal corporate capital structure;
3. Discuss the empirical work surrounding the performance of IPOs and SEOs and the theory developed to explain this evidence;
4. Discuss different corporate governance mechanisms and their role in reducing agency conflicts;
5. Provide a treatment of models aimed at explaining merger and takeover activity;
6. Critically read and interpret current corporate finance research papers, discuss the underlying theories and assess the empirical methodology.

Teaching Information

Please include reference to any distance learning or any significant e-learning components, if appropriate

20 contact hours split between lectures and tutorials (typically 16 hours lectures, 4 hours tutorials)

Assessment Information

The unit is assessed via a two-hour examination which tests all intended learning outcomes.

Formative assessment is undertaken through tutorials, where students receive verbal and written feedback on their work. In addition to comments on individual work, a 'model answer' is also provided where relevant.

Reading and References

• D. Hillier, M. Grinblatt and S. Titman (2012), Financial Markets and Corporate Strategy, Second European Edition, McGraw-Hill
• T.E. Copeland, J.F. Weston, K. Shastri (2005). Financial Theory and Corporate Policy, Fourth Edition, Pearson Addison Wesley
• J. Tirole (2006). The Theory of Corporate Finance, Princeton University Press
• J. Berk and P. DeMarzo (2017), Corporate Finance, Fourth Global Edition, Pearson
• Selected readings from finance academic journals